The world´s leading powers sought to break the deadlock over Iran´s
nuclear ambitions on Wednesday by challenging Tehran to hand over
part of its stockpile of enriched uranium in return for easing the
pressure on the country´s economy.

The talks in Baghdad focused on a dispute that has threatened to
cause a new war in the Middle East. An international contact group
consisting of the Security Council´s five permanent members and
Germany put forward a proposal designed as the first step towards
restoring confidence in the supposedly peaceful nature of Iran´s
nuclear programme.

The country has enriched some uranium to 20 per cent purity - a vital
step towards the 90 per cent needed for nuclear weapons. Iran´s
official explanation is that it needs this material to make fuel for
a civilian research reactor in Tehran.

Baroness Ashton, the European Union´s foreign policy chief who chairs
the contact group, proposed that Iran stop producing uranium enriched
to this level and hand over its existing stockpile. In return, Tehran
would receive the fuel for its research reactor from other countries.

Diplomats said this idea led to a "detailed exchange" of views, but
Saeed Jalili, Iran´s chief negotiator, was put on the spot by the
move and had not offered a concrete response. The talks are expected
to continue today.

"We are putting proposals on the table that are also of interest to
Iran," said Lady Ashton´s spokesman. "There are things we can do for
Iran. We hope the Iranians will come back with a positive reaction to
our proposals to deal with the concerns of the international
community. The ball is in their court now."

In return for exporting its stockpile of 20 per cent enriched
uranium, the contact group - consisting of Britain, America, France,
Russia, China and Germany - offered to review restrictions on the
sale of spare parts for Iran´s civil airliners.

They also raised the possibility scrapping a ban, due to come in full
in July, on oil tanker insurance for Iran. This would be a
significant concession, undoing one aspect of the embargo on Iranian
oil sales that the European Union is imposing from July 1.

But diplomats stressed no further easing of sanctions would be
offered until Iran had taken more steps.

Yesterday´s proposals did not cover Iran´s stockpile of some 5,500 kg
of uranium enriched to 3.5 per cent purity. If uranium is processed
to 90 per cent, it reaches weapons-grade and could be used to make a
nuclear bomb.

Sergei Lavrov, the Russian foreign minister, said that Wednesday´s
talks showed how sanctions on Iran could be scaled back. "As Iran
takes a step toward the global community, the world community should
take steps for weaker sanctions against Iran," he said.

However his Western counterparts believe that sanctions have been
instrumental in bringing Iran back to the negotiating table. "I don´t
think the Iranians are coming to these talks because they suddenly
changed their minds about anything. They are coming to these talks
because sanctions are beginning to bite," said a diplomat. They say
the measures will only be eased in return for concrete moves by
Tehran.

A statement from Tehran´s official media said Iran had made its own
offers in five broad areas but gave no details. "We said to the other
side that we need a comprehensive approach. We need the steps that
both sides have to take to be clearly defined and there is no
possibility of going back on them," said an Iranian official. "For
example, that they lift sanctions that they cannot then re-adopt two
months later under a different pretext."

The official media voiced dissatisfaction with the offer outlined by
Lady Ashton, calling it "outdated, not comprehensive and unbalanced."
Israeli Defence Minister Ehud Barak yesterday urged world powers not
to waver in the talks.